Equilar Blog

The Changing Face of Fortune 1000 Boardrooms, in Five Charts

October 6, 2015

We’re in an unprecedented era in shareholder engagement, and as a result, the make-up of U.S. boardrooms is changing to
reflect this new reality. Rules and regulations following Dodd-Frank have heightened the availability of information and
awareness around issues inside the boardroom, and the increasing influence of advanced technology and shareholder activism
requires new skillsets and fresh perspectives among directors.

Institutional investors regularly evaluate board composition—including age, tenure, gender—and they already have tools to
access and analyze these elements across their portfolios. With the ever-increasing accessibility of information, investors
are asking for more clarity and transparency from company boards.

To provide perspective on the impact of these trends, Equilar crunched the numbers on Fortune 1000 boards to identify what’s
happening with board composition at the most successful U.S. companies.

Average age and tenure on Fortune 1000 boards has decreased since the introduction of Dodd-Frank five years ago, suggesting
that companies are filling open positions with younger directors than they have in the past, and that board turnover has
accelerated. Since 2007, average director age has decreased steadily across the Fortune 1000, down 2.6 years to 63.0. In the
Fortune 100, there’s been a larger decrease of 3.0 years.

The change in tenor among America’s boardrooms has translated to a slightly shorter average tenure as well, especially at
Fortune 100 companies, where average tenure dipped to 8.9 years in 2014. The trend line shows a consistent decrease in the
Fortune 100, while across the larger sample sizes of the Fortune 500 and 1000, average tenure flat-lined in recent years,
remaining well above nine years.

Gender diversity in the boardroom is one of the most frequently discussed topics in corporate governance as boards seek
more diversity to gain a wider range of skillsets and perspectives to face a more engaged shareholder constituency. In the
past five years, we’ve seen the percentage of female directors at Fortune 100 companies rise above the 20% mark, and
increases for the Fortune 500 and 1000 were even larger, up 3.6 and 3.7 percentage points, respectively, though these
figures were growing from a much smaller base.

The increase in gender diversity across the Fortune 1000 is undoubtedly a contribution of many, but there are companies
that stand out as leaders. In December 2009, the SEC mandated that companies disclose the director nomination process for
considering diverse candidates. Equilar pulled a list of 10 companies in the Fortune 1000 that saw the greatest increases
in that time frame, each increasing the number of females on their boards by more than 25 percentage points. Even though
some of these companies started from scratch, there’s no denial that they’ve committed to diversifying their boards, and
all are more than 10 percentage points above the average for the Fortune 1000.

The companies in the chart above have been the biggest change agents, yet only one of them—Ulta—made the list of companies
with the highest percentage of female board members in 2014. Avon earns that distinction, and fittingly, considering “the
company for women” is a part of its logo—a full two-thirds of Avon’s board is female. Four other companies hit the 50% mark,
meaning that gender diversity is truly gender equality when it comes to director seats.

Overall, the trends in the Fortune 1000 are clear: Average age and tenure are sliding, and the number of female board members
is increasing, and all of these trends are most pronounced at the largest and most successful U.S. companies. These companies
are typically on the leading edge, but are they reflective of indicative of a larger shift in America’s boardrooms? Only time
will tell, and we’ll be keeping an eye on these trends as they unfold.

For more information on Equilar’s research and data analysis, please contact Dan Marcec, Director of Content & Marketing
Communications at dmarcec@equilar.com.

The data in this article is compiled from Equilar’s BoardEdge, a new data platform that features detailed information on
more than 135,000 U.S. board members. BoardEdge not only includes more than a dozen categories about each board member’s
background and leadership experience, but also features a network tool clearly displaying how board members are connected
to each other. This last feature—connection—is unavailable in the marketplace, and it provides investors and companies a
direct application of the data for board assessment, planning and networking.